Oil well re-fracking is on the rise in the United States as shale producers seek to boost production without making significant investments in new wells, Reuters has reported.
Re-fracking appears to be a way to reconcile shareholder insistence on higher returns and calls from the federal government to increase oil production at a time of tight supply, which has led to higher prices for both crude oil and refined products, chiefly fuels.
According to the report, re-fracking of existing shale wells can cost up to 40 percent less than drilling a new well. It can also double or triple the output of an existing well, one fracking industry executive told Reuters.
Economy has become important for shale drillers despite much higher benchmark oil prices because of widespread shortages of equipment, workforce, and raw materials that have increased production costs. These are up about 20 percent from a year ago, according to Callon Petroleum, a Texas-based company, as cited by Reuters.
Re-fracking could also help U.S. shale drillers boost their cash flow further, which would make their shareholders even happier than higher dividends.
According to a recent report by Saudi bank Al Rahji Capital, cash per well for U.S. shale producers rose to $34 per barrel in the first quarter of this year, from $23 per barrel in the last quarter of 2021.
This is still much lower than the $51 per barrel that shale drillers got in the first quarter of 2020, the report noted, but added that it is still “providing enough cushion to boost the production levels amid higher oil prices.”
U.S. crude oil prices have gained some 40 percent over the past 12 months, but domestic oil production remains about a million barrels daily below the record 12.8 million bpd the U.S. produced in early 2020.
By Irina Slav for Oilprice.com
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Irina is a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry. More